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PricewaterhouseCoopers Zhong Tian LLP
MoneyTreeTM China TMT ReportQ3/Q4 2015 Data source: Zero2IPO Research
Technology Institute
This MoneyTreeTM China Telecommunications, Media and Technology (TMT) Report includes information on private equity and venture capital (PE/VC) investment in the TMT industry for Q3/Q4 2015, as well as Q1/Q2 2015, 2014 and 2013.
Table of contents
1. Overview 4
2. PE/VC investments in the TMT industry 5
TMT industry investments compared with all industries 5
Investments by quarter 7
Investments by sector 8
First-time funding compared with follow-on funding 11
Investments by stage of development 13
Investments by region 16
3. PE/VC exits in the TMT industry 17
Exits by quarter 17
Exits by type 18
Exits by sector 20
4. Sector focus: Technology, Internet, and Telecommunications and Mobile
21
Investments in Technology 21
Investments in Internet 27
Investments in Telecommunications and Mobile 33
5. A close look at investments in Mobile 37
6. Methodology and definitions 40
7. Contacts 42
4 MoneyTreeTM China TMT Report Q3/Q4 2015
In the second half (H2) of 2015, private equity and venture capital (PE/VC) investment in the TMT industry increased steadily despite the downturn of the domestic macro-economy. The variable and uneven market had no material impact on TMT investments. In H2 2015, the TMT industry continued its high-speed development momentum of H1 2015, with the deal value increasing by 8% half over half (HoH) to US$19.01 billion, and the deal volume increasing by 11% HoH to 1,435 deals. Both the deal value and volume in the TMT industry in H2 2015 reached a new record since 2012.
The deal volume in the TMT industry, in Q3 accounted for half of the overall Q3 deals. The highest single-deal value continued to reach a historical high. There were 32 deals each with values over US$100 million in H2 2015. However, Q3 and Q4 were totally different. In Q3 the TMT industry continued its hot development trend of H1 but this declined significantly in Q4. As the capital market entered winter time, investors became prudent.
From the point of view of the sectors, the Internet clearly continued to see the most investment in terms of both deal volume and deal value. The deal value in the Telecommunications and Mobile sector exceeded that of the Technology sector, ranking second with investment of US$3 billion, the most it’s seen since 2012. In terms of deal volume, the Technology sector exceeded Telecommunications and Mobile, ranking second.
1. OverviewIn H2 2015, IPO was suspended and resumed, resulting in a significant decrease in total exit volume compared to H1. Meanwhile, due to good policies and a strong market, M&A grew quickly. The M&A volume in H2 2015 accounted for 47% of total exits, more than twice the level of H1 2015. Therefore, M&A became the most popular method of exit. In Q3, the volume of M&A activity reached a historical high since 2012.
With innovation as the major theme of development, the TMT industry, as a model, is continuously driving other traditional industries to move into a brand new era and develop new blueprints. This report shows you the details of PE/VC investments and exits in the TMT industry and its three major sectors, helping you understand the trends in TMT industry investments. We would greatly welcome discussing this report with you, and encourage you to contact us.
Wilson ChowPwC China & Hong Kong TMT Leader
Jianbin GaoPwC China TMT Leader
5 MoneyTreeTM China TMT Report Q3/Q4 2015
In Q3, the deal value of overall PE/VC saw a record high since 2012. Both the deal value and volume of TMT industry investment reached historical records since 2012
In Q3 2015, overall industry investment amounted to US$25.63 billion, an increase of 6% QoQ, reaching a new high since 2012. The deal volume experienced a slight decrease compared to Q2 2015, despite an increase of 11% QoQ in the average single-deal value. The TMT industry continued its high-speed development momentum of H1 2015, with deal value significantly increasing by 48% QoQ to US$13.29 billion, and deal volume increasing by 65% QoQ to 954 deals. Both the deal value and volume in the TMT industry of this quarter reached a new high since 2012.
TMT industry investments compared with all industries
2. PE/VC investments in the TMTindustry
In H2 2015, overall PE/VC investments continued to be hot in the sluggish capital market. In Q3, high growth continued after soaring in Q2. In Q4, it remained high though experiencing a sharp fall. It is still expected to maintain stability in 2016.
Overall, despite the fluctuation of the stock market and the downturn of the traditional economy, the investments in the TMT industry further increased in Q3 2015 with the deal value accounting for half of the overall industry investment. In Q4, this enthusiasm cooled down as investors turned cautious. However, from the point of financial investment, strategic investment and outbound acquisition, the TMT industry will continue to be a hotspot.
PwC Viewpoints
In Q4, the deal value and volume of overall PE/VC investments fell sharply
In Q4 2015, the deal value of overall PE/VC investments decreased by 40% QoQ, deal volume dropped by 48% QoQ while the average single-deal value increased by 15% QoQ. In Q4, the deal value and deal volume in the TMT industry dropped by 57% and 50%, respectively, compared to Q3, experiencing an overall downward trend.
Overall industry investment in H2 2015 maintained the strong momentum from the first half of the year and remained on an upward trend. Total TMT deal value and volume accounted for 46% and 40% of overall industry investments, respectively.
6 MoneyTreeTM China TMT Report Q3/Q4 2015
Overall PE/VC investments
In Q3 2015, there were a total of 2,379 PE/VC investments across all industries totalling US$25.63 billion, which represented a decrease of 4% by volume, but an increase of 6% by value compared to Q2 2015.
In Q4 2015, there were a total of 1,242 PE/VC investments across all industries, a decrease of 48% compared to Q3 2015. The deal value of US$15.33 billion decreased by 40% compared to Q3 2015.
PE/VC investments in TMT
In Q3 2015, there were 954 PE/VC investments in the TMT industry, accounting for 40% of total volume across all industries. The deal value of US$13.29 billion represented 52% of the total PE/VC deal value in the same period.
In Q4 2015, the number of TMT investments reached 481, accounting for 39% of total PE/VC volume across all industries. Deal value for the quarter was US$5.72 billion, representing 37% of the total PE/VC deal value in the same period.
Figure 1: Comparison of PE/VC investments and TMT investments ‒ Q1 2013-Q4 2015 (Deal value)
Q1’13 Q2’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15Q3’13
30,000
25,000
20,000
15,000
10,000
5,000
0
$25,632
$15,325
$24,176
$18,584
$5,723
$8,957$8,577
$11,230
$16,084$17,612
$5,868$7,284$7,531
$6,675
$3,240$1,191 $1,962
$3,614$2,490
$5,539$3,865
$5,137
$779
$13,289
US$m
PE/VC funding in all industries PE/VC funding in TMT industry
Figure 2 : Comparison of PE/VC investments and TMT investments – Q1 2013-Q4 2015 (Deal volume)
3,000
2,500
2,000
1,500
1,000
500
0
257 259476 463
336 412618
Q1’13 Q2’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15Q3’13
1,814
2,486 2,379
1,242
481
954
577716
429466251271288239197168
593
PE/VC deal volume in all industries PE/VC deal volume in the TMT industry
7 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by quarter
In Q3 2015, there were 954 deals in the TMT industry, a rise of 65% over Q2 2015. The deal value amounted to US$13.29 billion, an increase of 48% compared to Q2 2015.
In Q4 2015, there were 481 deals, a drop of 50% compared to Q3 2015. The deal value amounted to US$5.72 billion, down 57% compared to Q3 2015.
In Q3, the deal value and volume reached the highest since 2012
In Q3, the deal value and volume in the TMT industry rose sharply by 48% and 65%, respectively, compared to Q2 2015, reaching new records since 2012. In Q3, the average single-deal value decreased by 38% QoQ. However, there were 21 deals over US$100 million, and the largest single deal was US$3 billion.
In Q4, the overall investments saw a downward trend
In Q4, the deal value and volume in the TMT industry slumped by 57% and 50%, respectively, compared to Q3, representing a sluggish trend. In Q4, there were 11 deals over US$100 million, and the largest single deal was US$0.5 billion.
The booming trend of investments in the TMT industry was evidenced in various aspects:
1. Both the deal value and volume has increased significantly year after year. The volume of single-value deals over US$100 million jumped to 71 in 2015 from 9 in 2012, with 39 and 32 for H1 and H2 2015, respectively. The highest single-deal value was eye-catching and continued to reach new highs.
2. Because of the popularization of the smart phone and tablet PC, among all the deals with single values over US$100 million, 54 deals were related to internet or mobile internet. Most large internet deals were investments of E-commerce and internet services such as travel, transportation and etc.
3. The large volume of single deals with a value over US$100 million reflects a distinctive characteristic of China’s TMT industry currently. As the traditional economy has not yet seen the degree of industry consolidation observed in developed countries, China’s TMT industry, and particularly the Internet sector act as the main force driving industry consolidation and connecting traditional industries with the internet. More large deals are expected in 2016.
PwC Viewpoints
Figure 4: Volume of TMT investments with single value over US$100 million by quarter – Q1 2013-Q4 2015
25
20
15
10
5
0
Q1’13 Q2’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15Q3’13Q1’12 Q2’12 Q4’12Q3’12
0 022
5
23
97
11
1920
21
11
79
Figure 3: TMT investments by quarter ‒ Q1 2013-Q4 2015 (Deal volume/Deal value)
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1,200
1,000
800
600
400
200
0
Q1’13 Q2’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15Q3’13
$1,191 $779 $1,962$3,614 $2,490
$5,539$3,865
$5,137
$8,577 $8,957
$13,289
$5,723
Deal value Deal volume
US$m
168 197251239
288 271
466 429
716
577
954
481
8 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by sector
The TMT industry is divided into the following sectors: Technology, Internet, Telecommunications and Mobile, and Entertainment and Media.
As the hottest investment sector in the TMT industry, the Internet remained outstanding in H2 2015. There were 487 investments with a total investment value of US$5.36 billion in Q3, reaching a record high since 2012. The deal volume and value in Q4 decreased by 51% and 35%, respectively, compared to Q3.
The deal value in H2 2015 saw little fluctuation compared to the first half of the year. However, the deal volume increased greatly, leading to the single-average-deal value to slump by 45% QoQ. In Q3 2015, the deal volume was over 200 deals for the first time, a new record high since 2012. Meanwhile, there were six deals with over US$100 million single-deal value in Technology in H2, and the largest single deal was US$1 billion.
The Telecommunications and Mobile sector posted good performance, second only to the Internet in H2 2015. In Q3, average single-investment value sharply increased by 244%. In Q3 2015, the deal value increased by a whopping 399% compared to Q2, reaching a new historical record since 2012. The deal volume increased by 45%. In Q4, the deal value and volume declined sharply by 89% and 60%, respectively, compared to Q3 2015. The largest single-deal value in H2 2015 was in the Telecommunications and Mobile sector, with a value of US$3 billion.
In Q3, the deal volume in the Entertainment and Media sector increased by 45%, a new record high since 2012. However, the deal value decreased by 54% QoQ. In Q4, the deal volume and value continued to decrease by 42% and 78%, respectively.
In H2 2015, the Internet sector attracted the most investments. Both the proportions of its deal volume and its value ranked first, and it had the largest number of deals with single-deal-value over US$100 million, primarily due to contributions from Internet Service investments. The deal value in Telecommunications and Mobile exceeded that of Technology and ranked second due to the highest investment since 2012, fully demonstrating the charm of Mobile. By contrast, in H2 2015, the Technology and Entertainment and Media sectors had huge deal volume, but small single-deal values.
PwC Viewpoints
Figure 5: Deal value comparison in TMT sectors – Q1 2013-Q4 2015
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
$1,191$1,962
$3,614
$2,490
$5,539
$3,865
$5,137$5,718
$8,577 $8,957
$13,288
$779
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
Telecommunications and Mobile
Technology Internet
Entertainment and Media
US$m
Figure 6: Deal volume comparison in TMT sectors – Q1 2013-Q4 2015
600
500
400
300
200
100
0
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’1516
38
13 22 319 12 15 10 20 31 45 26
5645
71 74 76 74112 113
94 78119
207
125
105152
269
154
61
67 68 48 4036
78 83 70115 138 125
245 228
370316
487
239
Telecommunicationsand Mobile
Technology Internet Entertainment and Media
In Q3 2015, among the 21 deals over US$100 million, the Internet sector, Technology sector, Telecommunications and Mobile sector, and the Entertainment and Media sector accounted for 58%, 14%, 14% and 14%, respectively.
In Q4 2015, among the 11 deals over US$100 million, the Internet sector, Technology sector, and the Telecommunications and Mobile sector represented 64%, 27% and 9%, respectively.
9 MoneyTreeTM China TMT Report Q3/Q4 2015
Q3 2015Total deal volume for the TMT industry reached 954 deals, with a total investment value of US$13.29 billion.
Figure 8: Deal value in TMT sectors Q3’15 (US$m)
Figure 7: Deal volume in TMT sectors Q3’15
Internet: 487 deals, 51% of the total
Technology: 269 deals, 28% of the total
Telecommunications and mobile: 152 deals, 15.9% of the total
Entertainment and Media: 45 deals, 5% of the total
Undisclosed: 1 deal, 0.1% of totalDeal value by sectors:
Internet: US$5.36 billion, 40% of the total
Telecommunications and mobile: US$4.28 billion, 32% of the total
Technology: US$2.39 billion, 18% of the total
Entertainment and Media: US$1.25 billion, 9.99% of the total
Undisclosed: US$790,000, 0.01% of the total
48751%
26928%
15215.9%
455%
10.1%
TechnologyTelecommunications and Mobile
Internet
Entertainment and MediaUndisclosed
$5,36140%
$4,28232%
$2,39218%
$1,2539.99%
$0.790.01%
Telecommunications and MobileTechnology
Internet
Entertainment and Media Undisclosed
QoQ comparison between Q2 2015
and Q3 2015
Deal volume
Dealvalue
Technology技 115% 47%
Internet技技 54% 44%
Telecommunications and Mobile
45% 399%
Entertainmentand Media
45% 54%
10 MoneyTreeTM China TMT Report Q3/Q4 2015
QoQ comparison between Q3 2015
and Q4 2015
Deal volume
Dealvalue
Technology技 43% 39%
Internet技技 51% 35%
Telecommunications and Mobile
60% 89%
Entertainmentand Media 传技
42% 78%
Deal volume by sector:
Internet: 239 deals, 49.8% of the total
Technology: 154 deals, 32% of the total
Telecommunications and Mobile: 61 deals, 13% of the total
Entertainment and Media: 26 deals, 5% of the total
Undisclosed: 1 deal, 0.2% of total
Deal value by sector:
Internet: US$3.51 billion, 61% of the total
Technology: US$1.46 billion, 26% of the total
Telecommunications and Mobile: US$480 million, 8% of the total
Entertainment and Media: US$272 million, 4.9% of the total
Undisclosed: US$4.96 million, 0.1% of the total
Q4 2015
Total deal volume for the TMT industry reached 481 deals, with a total investment value of US$5.72 billion.
Figure 9: Deal volume in TMT sectors Q4’15
Figure 10: Deal value in TMT sectors Q4’15 (US$m)
239
49.8%
15432%
6113%
265%
10.2%
Telecommunications and MobileTechnology Internet
Entertainment and Media Undisclosed
$3,50561%
$1,46126%
$4808%
$2724.9%
$4.960.1%
Entertainment and Media Undisclosed
Technology Internet
Telecommunications and Mobile
11 MoneyTreeTM China TMT Report Q3/Q4 2015
Figure 11: TMT follow-on funding compared with initial investments – Q1 2013-Q4 2015
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
67%63% 61% 58%
78%73%
61%65%
53% 55%
44% 45%
Initial investments Follow-on investments
First-time funding compared with follow-on funding
Q3 2015
There were 742 enterprises engaged in first-round funding in the TMT industry, making up 78% of the total deal volume in the TMT industry, up 20% compared to Q2 2015, and a new record high since 2012. The total deal value of first-round funding reached US$4.48 billion, representing 34% of the total deal value in the TMT industry in Q3, up 16% compared to Q2 2015, which created a new record high since 2012.
Q4 2015
In this quarter, 353 TMT companies successfully received first-round funding, accounting for 73% of the total deal volume in the TMT industry. The percentage was only five percent lower than the previous quarter in the TMT industry. The total investment figure for first-round funding was US$2.19 billion, representing 38% of the total deal value in the TMT industry, an increase of 4% compared with Q3 2015.
12 MoneyTreeTM China TMT Report Q3/Q4 2015
Q3 2015
Enterprises engaged in first-round funding by sector:
Internet: 400 enterprises, funding total US$2 billion
Technology: 185 enterprises, funding total US$611 million
Telecommunications and Mobile: 121 enterprises, funding total US$918 million
Entertainment and Media: 35 enterprises, funding total US$952 million
Undisclosed: 1 enterprise, funding total US$790,000
For first-round funding, 536 enterprises were at the early stage, accounting for 72%; 147 enterprises were at the expansion stage, accounting for 20% and 59 enterprises were at late stage, accounting for 8%.
Q4 2015
Enterprises engaged in first-time funding by sector:
Internet: 191 enterprises, funding total US$1.225 billion
Technology: 96 enterprises, funding total US$621 million
Telecommunications and Mobile: 47 enterprises, funding total US$317 million
Entertainment and Media: 18 enterprises, funding total US$18 million
Undisclosed: 1 enterprise, funding total US$4.96 million
For first round funding, 236 enterprises were at the early stage, accounting for 67%; 76 enterprises were at the expansion stage, accounting for 21% and 41 enterprises were at late stage, accounting for 12%.
In H2 2015, over 70% of investments were first round, illustrating the rapid upgrading and emerging new projects in the TMT industry. Meanwhile, there were nine deals with single values over US$100 million among first-round funding, showing that investors became more and more interested in new projects and were willing to invest more in them. In terms of industry distribution of first round investment, Internet enterprises were far ahead of the other three sectors in both volume and value. Various new internet or mobile internet enterprises emerged one after another due to the implementation of entrepreneurship and innovation incentive policies encouraged by the government. Internet services related to people life, such as transportation, travel, education and automobile, became the main trend of entrepreneurship. Innovation and entrepreneurship not only changed our consumption patterns of life but also attracted many investors’ interest.
PwC Viewpoints
Q3 2015
First-time funding summary (US$)
Number of enterprises
<= 1m 363
1m-5m 266
>5m-10m 46
>10m 60
N/A 7
Q4 2015
First-time funding summary (US$)
Number of enterprises
<= 1m 115
1m-5m 165
>5m-10m 43
>10m 30
185
121
40035
19196
47 18
13 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by stage of development
The deals for early-stage investments saw dramatic increase in Q3 and significant decrease in Q4
Among the four stages of investment, the deal volume for early-stage investments took the lead as usual, accounting for 63% and 57% of the total in Q3 and Q4 2015, respectively. In Q3 2015, early-stage investments reached 603 deals, or US$4.165 billion, the highest level since 2012. In Q3, the highest single deal value reached US$499 million.
In Q3, the deal volume and value for expansion stage hit new records, while in Q4 both dropped significantly
The deal value of expansion-stage investments exceeded that of early-stage investments by almost US$6 billion, accounting for 45% of the total deal value of all four stages, a historical high since 2012. In Q4, the deal value slumped 80% compared to Q3, only accounting for 21%. This is because there was a huge investment of US$3 billion in Q3, which was also the highest H2 single-deal value in the TMT industry. In Q3, the deal volume increased by 74% compared to Q2 and reached a record high since 2012 with 232 deals. In Q4, the deal volume decreased by 49% compared to Q3 and remained around 25% in H2.
Deal volume for late-stage investments in Q3 exceeded one hundred for the first time
The deal value for late-stage investments in Q3 2015 sharply increased by 553% to US$1.29 billion, accounting for 10% of the total. However, the deal value in Q4 decreased by 54% compared to Q3. The late-stage investments in Q3 increased by 76% to 109 deals, the highest level since since 2012.
PIPE (private investment in public equity) deal volume hit record high since 2012 in Q4 2015
Overall, the deal volume of PIPE investments rose further in H2 2015. In Q4, there were 25 deals, an increase of 150% compared to Q3. In addition, over 60% of the PIPE investments were in the Technology sector. However, the deal value of PIPE suffered a significant decline compared to the sharp increase over Q2. The total deal value in H2 was less than that of Q2, primarily due to decreases in the average single-deal value. In H2 2015, the transaction with the second highest deal value was a PIPE transaction of US$1 billion.
Figure 12: TMT investments by stage of development – Q1 2013-Q4 2015 (Deal value)
PIPE
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
$1,188 $779
$1,955
$3,614$2,490
$5,539
$3,865
$5,137
$8,577$8,957
$13,289
$5,723
Early stageLate stage Expansion stage
US$m
Figure 13: TMT investments by stage of development – Q1 2013-Q4 2015 (Deal volume)
PIPE
700
600
500
400
300
200
100
0Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
327 21 22 22 21 29
62 65
119
232
13312992
6381
695857
80122
100110
138 147165 160
314
312
544
367
603
272
109
16 1723
8 7 6 53 412 10
2518
Early stage Late stageExpansion stage
14 MoneyTreeTM China TMT Report Q3/Q4 2015
Q3 2015
Total deal volume in the TMT industry reached 954 deals, with a total investment value of US$13.29 billion.
Deal volume by stage of development:
Early stage: 603 deals, 63% of the total
Expansion stage: 232 deals, 24% of the total
Late stage: 109 deals, 12% of the total
PIPE: 10 deals, 1% of the total
Figure 15: Deal value in TMT industry by stage of development Q3’15(US$m)
$5,95545%
$4,16531%
$1,87914%
$1,29110%
PIPEEarly stageLate stage
Expansion stage
Deal value by stage of development
Expansion stage: US$5.96 billion, 45% of the total
Early stage: US$4.17 billion, 31% of the total
PIPE: US$1.88 billion, 14% of the total
Late stage: US$1.29 billion, 10% of the total
QoQ comparison between Q2 2015 and Q3 2015
Deal volume
Deal value
Early stage 64% 100%
Expansion stage
74% 147%
Late stage 76% 553%
PIPE 17% 56%
Figure 14: Deal volume in TMT industry by stage of development Q3’15
60363%
23224%
101% 109
12%
PIPE
Early stage
Late stageExpansion stage
15 MoneyTreeTM China TMT Report Q3/Q4 2015
Q4 2015
Total deal volume in the TMT industry reached 481 deals, with a total investment value of US$5.72 billion.
Deal volume by stage of development
Early stage: 272 deals, 57% of the total
Expansion stage: 119 deals, 25% of the total
Late stage: 65 deals, 13% of the total
PIPE: 25 deals, 5% of the total
Deal value by stage of development
Early stage: US$2.27 billion, 40% of the total
PIPE: US$1.66 billion, 29% of the total
Expansion stage: US$1.19 billion, 21% of the total
Late stage: US$599 million, 10% of the total
Figure 16: Deal volume in TMT industry by stage of development Q4’15
27257%
11925%
6513%
255%
PIPE
Early stage
Late stageExpansion stage
Figure 17: Deal value in TMT industry by stage of development Q4’15 (US$m)
$2,27340%
$1,65629%$1,194
21%
$59910%
PIPE
Early stageLate stage
Expansion stage
QoQ comparison between Q3 2015 and Q4 2015
Deal volume
Deal volume
Early stage传 55% 45%
Expansion stage传传
49% 80%
Late stage传 40% 54%
PIPE 150% 12%
16 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by region
In Q3 and Q4 2015, 1,435 TMT deals disclosed the region where investments took place. The top five investment regions in China in the TMT industry were Beijing with 493 deals (accounting for 34% of the total deal volume), Shanghai with 261 deals, Shenzhen with 137 deals, Zhejiang Province with 132 deals and Guangdong Province (except Shenzhen) with 119 deals. The total deal volume of the top five regions was 1,142, accounting for 80% of the total.
In terms of investments regions, both the deal volume and value in Beijing were far above other provinces in H1 2015; Beijing was still the core area of the Chinese TMT industry, and it is estimated that it would be difficult to surpass by other regions in the short term.
In H1 2015, the deal volume and value in Shanghai saw a significant increase; Fujian Province also surged abruptly with deal value surpassing Shenzhen. Overall, TMT investments were mostly concentrated in the four first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen and the provinces located on the east coast of China.
Total deal value of investments with regions disclosed was US$19.01 billion. In terms of deal value, the top two rankings remained the same. Tianjin surpassed Shenzhen and ranked third. The top five regions by deal value had an aggregated deal value of US$16.47 billion, accounting for 87% of the total. Beijing took the top spot with an impressive sum of US$7.82 billion, and Shanghai ranked second with US$4 billion, followed by Tianjin, Shenzhen and Zhejiang Province ranking third, fourth and fifth, respectively, with an aggregated deal value of US$4.65 billion.
PwC Viewpoints
Figure 18: The top six regions for TMT investments in Q3/Q4’15 (Deal volume/Deal value)
493
261
137
132
119
$7,820
$1,502
$1,480
$3,996
$519
16 $1,668
0 4,000 6,000 10,0008,0002,000
US$m
Deal volume
Beijing
Shanghai
Zhejiang Province
Tianjin
Shenzhen
Guangdong Province (except Shenzhen)
17 MoneyTreeTM China TMT Report Q3/Q4 2015
Exits by quarter
3. PE/VC exits in the TMT industry
In H2 2015, TMT exit volume hit a record high since 2012
In Q3 2015, there were 69 exits, and one quarter later, the number decreased to 53. There were 49 exits in H1 2015. In general, the total amount of exits in H2 2015 increased by 149% compared to H1 2015.
The Chinese economy slowed down in 2015. In H2 2015, because A-share IPO was suspended and resumed, M&A and management buy-out surpassed IPO as the main forms of exit. In H2 2015, due to the strong support from the government, the M&A transactions started to boom and reached its second highest point since 2012. It is expected that domestic M&A will continue to increase in the future. The booming of M&A is mainly due to the long wait times for IPO. Backdoor listing or significant assets restructuring has become the exit method for many TMT investments.
Meanwhile, a large proportion of A-share listed companies and domestic investment companies entered into M&A, mainly because of the economic slow-down. More and more enterprises are considering their future development in the industry and intend to further expand businesses, develop production lines and seek new performance growth through M&A with other relevant enterprises. Furthermore, M&A costs were low due to the sluggish capital market, attracting more enterprises to exit through M&A. According to the disclosed data, over 80% of M&A deals were not related to BAT (Baidu, Alibaba, Tencent), which disproves the traditional mode that BAT, as the TMT leaders, involved in many M&A deals in various internet subsectors.
PwC Viewpoints
Figure 19: Exit volume in the TMT industry – Q1 2013-Q4 2015
80
70
60
50
40
30
20
10
0
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
6
23 2326
69
53
20
1014
18 16 17
18 MoneyTreeTM China TMT Report Q3/Q4 2015
The number of IPOs declined dramatically in Q3 2015 due to the suspension of IPO in July, accounting for the drop to 14% from 77% in Q2. This was the second depression since H1 2013. The resumption of IPO in November 2015 resulted in a slight rebound in the number of IPOs in Q4, when they accounted for 28% of exits.
M&A accounted for 46% and 47% of total exits in Q3 and Q4 2015, respectively, increasing by more than 100% compared to H1 2015. Therefore, M&A became the major method of exit. In Q3, the number of M&A exits reached a new historical high since 2012.
Exits by type
Historically, management buy-out and secondary sale represent a small percentage, normally no more than 20%, of the total exits. In Q3, the proportion of IPO declined greatly due to suspension, and both the management buy-out and secondary sale exits broke the historical record since 2012. The number of secondary sales was far more than that of IPO. There were no management buy-outs in Q4, and the number of secondary sales dropped slightly, and were lower than IPOs.
Figure 20: TMT exit trends by type – Q1 2013-Q4 2015
IPO
80
70
60
50
40
30
20
10
0
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
2 11
1 11
11 1 1
2
22 22 2
335 6 69 8
45 5
8
4
77
10
11
11
14 20 32
13
15
25
19
10
8
4
Strategic sale Management buy-out Secondary sale
19 MoneyTreeTM China TMT Report Q3/Q4 2015
In Q3 2015, there were 69 exits in total, broken down as follows:
Strategic sale: 32 exits, 46% of the total
Secondary sale: 19 exits, 28% of the total
IPO: 10 exits, 14% of the total
Management buy-out (including buy-back): 8 exits, 12% of the total
In Q4 2015, there were 53 exits in total, broken down as follows:
Strategic sale: 25 exits, 47% of the total
IPO: 15 exits, 28% of the total
Secondary sale: 13 exits, 25% of the total
National Equities Exchange and Quotations (“NEEQ”) became a new exit channel and IPO in the US went downward
Due to the suspension of IPO in July, the number of IPOs in Q3 declined by 50% compared to Q2. However, with the resumption of IPO in November, the number of IPOs in Q4 increased by 50% compared to Q3.
In terms of choices of listing markets, in Q3 2015, 90% of TMT companies were listed in Mainland China and the remaining 10% listed in the US. In Q4 2015, 71% of TMT companies were listed in Mainland China, and 29% were listed in Hong Kong.
The A share market experienced sharp fluctuation. The whole capital market was struck seriously. However, the gloom in the A share market triggered fervent NEEQ. Among the TMT companies listing domestically, 36% chose to list on the NEEQ, 21% chose to list on the main board of the Shanghai Stock Exchange and the SME board of Shenzhen Stock Exchange, respectively, and 11% chose to list on the main board and GEM Board of Shenzhen Stock Exchange, respectively.
Figure 21: Comparison of TMT exits in mainland China, Hong Kong and US capital markets – Q1 2013-Q4 2015
Q2’13
100%
Q1’13
0%
Q3’13 50%50% Q4’13
43%
57%
Q1’14 Q2’14
90%
10%
64%
27%9%
Q4’14 Q1’15 Q2’15 Q3’15 Q4’15Q3’14
64%
27%9%
50% 57%
29%14%25%25%
86% 80%
10%10%14%
90%
10%
71%
29%
Mainland China Hong Kong US
Figure 22: Exit types in the TMT industry Q3’15
3246%
1014%
1928%
812%
IPOStrategic sale
Secondary saleManagement buy-out
Figure 23: Exit types in the TMT industry Q4’15
2547%
1528%
1325%
IPOStrategic sale
Management buy-out
20 MoneyTreeTM China TMT Report Q3/Q4 2015
Exits in the Technology sector increased greatly in H2 2015, accounting for over 50%
The exit volume in the Technology sector ranked the highest among the four sectors, accounting for 51% of the total in TMT industry in H2 2015. The exit volume of 35 in Q3 2015 reached a new historical high since 2012 and increased by 106% compared to Q2 2015.
The Internet sector saw more exits in Q3 2015
The exits in the Internet sector in Q3 reached a historical high since 2012 while the investments also increased. The exit volume was four times that of Q2. The exit volume in Q4 decreased by 44% compared to Q3. However, it still exceeded the total of exits in H1.
Exits in the Telecommunications and Mobile sector and the Entertainment and Media sector increased
In Q3, there was a rush of exits in both the Telecommunications and Mobile sector and the Entertainment and Media sectors; the exit volume increased by 400% and 167%, respectively, compared to Q2, creating a new record high since 2012. In Q4, the exit volume in the Telecommunications and Mobile decreased by 10%, while the volume in the Entertainment and Media sector remained stable.
Exits by sectorQ3 2015
Exits by sector in the TMT industry:
Technology: 35 deals, 51% of the total
Internet: 16 deals, 23% of the total
Telecommunications and mobile: 10 deals, 14% of the total
Entertainment and Media: 8 deals, 12% of the total
Q4 2015
Exits by sector in the TMT industry:
Technology: 27 deals, 51% of the total
Internet: 9 deals, 17% of the total
Telecommunications and Mobile: 9 deals, 17% of the total
Entertainment and Media: 8 deals, 15% of the total
Figure 24: IPO exits in the TMT industry – Q1 2013-Q4 2015
40
35
30
25
20
15
10
5
0
Q1’15 Q2’15 Q3’15 Q4’15Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14
4 4
10 0
00 0
22
22
2 2
13
9
9
6
12 11
1716
10
8 8
35
27
57 7 7
33
34
4 4 4 4
11
Technology InternetTelecommunications and Mobile Entertainment and Media
21 MoneyTreeTM China TMT Report Q3/Q4 2015
4. Sector focus: Technology, Internet, and Telecommunications and Mobile
Investments in Technology
The Technology sector includes IT Services, Hardware, Software, Electronics & Optoelectronics Devices and Semiconductor.
In H2 2015, total deal value in the Software subsector increased rapidly, and the Software subsector took the lead in investments
In H2 2015, deal volume in the Software subsector increased substantially, and in Q3 2015, it increased by 316% compared to Q4 2014, reaching a historical high since 2012. The deal value in Q3 2015 increased sharply by 1,160% compared to Q2 2015, accounting for up to 62% of the total deal value in Technology sector. The main reason was that a listed Software company obtained a PIPE investment of US$1 billion, which increased the overall deal value. Deal value in Q4 2015 decreased by 82% compared to Q3 2015 because there were no such huge investments in Q4 2015.
In Q3 2015, deal volume in both the Electronics & Optoelectronics Devices and the IT Services subsectors reached record highs since 2012
In Q3 2015, deal volume in the Electronics & Optoelectronics Devices subsector increased by 75% compared to Q2 2015, reaching a historical high since 2012. The deal value in Q4 2015 increased by 144% compared to Q3 2015, accounting for up to 55% of the total. In Q3 2015, deal value in the IT Services subsector was higher than that in the Electronics & Optoelectronics Devices subsector, but deal volume was equal. However, the IT Services deal value in Q4 2015 decreased by 65% compared to Q3 2015 and accounted for only 11% of the total, which was far lower than that of the Electronics & Optoelectronics Devices subsector.
In H2 2015, investments in the Semiconductor subsector decreased substantially
In Q3 and Q4 2015, deal value in the Semiconductor subsector accounted for as low as 1% and 11% of the total deal value in Technology sector, respectively. The deal value in Q3 2015 decreased by 97% compared to Q2 2015. Investments in H2 2015 were far less than that in H1 2015, which was mainly because in H2 2015, and there were no single high-value investments, while in Q1 2015, there was a high-value investment in the Semiconductor subsector. In a word, there was an obvious decline in investments in the Semiconductor subsector in H2
Figure 25: Deal value in the Technology sector – Q1 2013-Q4 2015
3,000
2,500
2,000
1,500
1,000
500
0
$128$230
$848
$1,583
$2,813
$2,389 $2,392
$1,632$1,461
$218
$1,001
$574
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
US$m
Hardware
Semiconductor IT Services
Software
Electronics & Optoelectronics Devices
Figure 26: Deal volume in the Technology sector – Q1 2013-Q4 2015
90
80
70
60
50
40
30
20
10
0
Q1’15 Q2’15 Q3’15 Q4’15Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14
1618
72 21
11 1113
2326
35
44
79
70
34
34
18
59
37
7 6
40
19
15
302522
23
16
27
2117
137
5 5
23
22
153
3 32 2 27
15
15
21
13
913
23 5
1
26
Hardware Semiconductor
IT ServicesSoftwareElectronics & Optoelectronics Devices
compared to H1, but the change is tiny when compared to prior years.
In Q3 2015, investments in the Hardware subsector reached a historical high since 2012, but still ranked low
In Q3 2015, deal volume and deal value in the Hardware subsector increased by 127% and 81%, respectively, compared to Q2 2015, reaching new records since 2012. However, the deal value still ranked low in the Technology sector as a whole. In H2 2015, the deal value in the Hardware subsector accounted for less than 5%, and the deal volume only ranked slightly higher than that in the Semiconductor subsector.
22 MoneyTreeTM China TMT Report Q3/Q4 2015
QoQ comparison between Q2 2015
and Q3 2015
Deal volume
Deal value
Electronics & Optoelectronics Devices
75% 18%
Software 316% 1,160%
IT Services 80% 73%
Semiconductor传 133% 97%
Hardware 127% 81%
Deal volume and value
Q3 2015
There were a total of 269 deals in the Technology sector, with a total investment value of US$2.39 billion.
Software:79 deals, 29% of the total; deal value of US$1.49 billion, 62% of the total
IT Services: 79 deals, 29% of the total; deal value of US$458 million, 19% of the total
Electronics & Optoelectronics Devices:70 deals, 26% of the total; deal value of US$327 million, 14% of the total
Hardware: 34 deals, 13% of the total; deal value of US$88 million, 4% of the total
Semiconductor: 7 deals, 3% of the total; deal value of US$27 million, 1% of the total
Figure 27: Deal volume by Technology subsector Q3’15
7929%7
3%
3413% 79
29%
7026%
Hardware Semiconductor
IT ServicesSoftwareElectronics & Optoelectronics Devices
Figure 28: Deal value by Technology subsector Q3’15 (US$m)
$1,49262%
$884%
$271%
$45819%
$32714%
Hardware Semiconductor
IT ServicesSoftwareElectronics & Optoelectronics Devices
The deal volume and deal value of the Technology sector in 2015 increased a lot, compared to previous years. In H2 2015, the investments in the Technology sector were mostly related to software and IT service. Artificial intelligence, cloud computing and IDC were the hotspots of investments.
With the fast development of internet, though the direction of internet investment mainly focused on consumer side, many internet companies who serviced for small and medium enterprises attracted more and more investors, as various small and medium enterprises emerged one after another. The year 2015 was a turning point for the Technology sector and more and more investors will pay attention to it in the future.
PwC Viewpoints
23 MoneyTreeTM China TMT Report Q3/Q4 2015
Deal volume and value
Q4 2015
There were a total of 154 deals in the Technology sector, with a total investment value of US$1.46 billion.
Software:59 deals, 38% of the total; deal value of US$272 million, 18% of the total
IT Services:37 deals, 24% of the total; deal value of US$159 million, 11% of the total
Electronics & Optoelectronics Devices:34 deals, 22% of the total; deal value of US$798 million, 55% of the total
Hardware:18 deals, 12% of the total; deal value of US$69 million, 5% of the total
Semiconductor:6 deals, 4% of the total; deal value of US$162 million, 11% of the total
Figure 29: Deal volume by Technology subsector Q4’15
Figure 30: Deal value by Technology subsector Q4’15 (US$m)
5938%
64%
3724%
3422%
1812%
Hardware Semiconductor
IT ServicesSoftwareElectronics & Optoelectronics Devices
$79855%
$695% $162
11% $15911%
$27218%
HardwareSemiconductorIT ServicesSoftware
Electronics & Optoelectronics Devices
QoQ comparison between Q3 2015
and Q4 2015
Dealvolume
Deal value
Electronics & Optoelectronics Devices 传传传传传
51% 114%
Software 25% 82%
IT Services传传 53% 65%
Semiconductor 传 14% 506%
Hardware 47% 21%
24 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by stage of development
Early-stage deal volume and value in Q3 reached a new high since 2012
The deal volume and value for the early stage in Q3 2015 reached its highest level on record since 2012 when we started to track investment trends, and the deal volume and deal value rose substantially by 159% and 581%, respectively, compared to Q2 2015. In Q3 2015, an investment with deal value of US$100 million in the IT Services subsector contributed to the overall total value of the early-stage investments.
Deal volume at the expansion and late stages in Q3 multiplied
Overall, the deal volume and value in H2 2015 at the expansion and late stages remained stable. In Q3 2015, the deal volume at both the expansion and late stages reached a historical record since 2012, almost doubled compared to that of Q2 2015. In Q3 2015, both the deal volume and value at the expansion stage were greater than that at the late stage. However, the deal volume and value in Q4 2015 at the late stage surpassed that of the expansion stage. This was mainly due to a deal of US$100 million made in Q3 at the expansion stage in a Software company and a deal of US$376 million made in Q4 at the late stage in an Electronics & Optoelectronics Devices company.
PIPE investments increased continuously, with the deal value ranking No. 1
In H2 2015, PIPE investments maintained the good momentum from H1, with the deal volume continuously reaching new records since 2012 and the deal value ranking No. 1. There were a total of three deals with values exceeding US$100 million across H2 2015, the deal values of which were US$1 billion, 249 million and 125 million, respectively.
Figure 31: Deal value by stage of development in the Technology sector – Q1 2013-Q4 2015
3,500
3,000
2,500
2,000
1,500
1,000
500
0
PIPE
$128 $230 $218
$574
$2,813
$2,389
$1,001
$1,632$1,461
$2,392
$848
$1,583
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
Early stageExpansion stageLate stage
US$m
Figure 32: Deal volume by stage of development in the Technology sector – Q1 2013-Q4 2015
120
100
80
60
40
20
0
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
PIPE
15
3126
2410 1014
40
106
6 715
54
37
48
98
88
76
48 3
21 21
11
417
88
1 25
18 31
1182
20
10
37
36
68
39
34
46
32
14
3
Early stageExpansion stage Late stage
25 MoneyTreeTM China TMT Report Q3/Q4 2015
QoQ comparison between Q3 2015
and Q4 2015
Deal volume
Deal value
Early stage 58% 69%
Expansion stage技
51% 66%
Late stage 29% 89%
PIPE 114% 49%
Investments by stage of development
Q3 2015
There were a total of 269 deals in the Technology sector, with a total investment value of US$2.39 billion.
Expansion stage: 98 deals, 36% of the total; deal value of US$540 million, 23% of the total
Early stage: 88 deals, 33% of the total; deal value of US$385 million, 16% of the total
Late stage: 76 deals, 28% of the total; deal value of US$297 million, 12% of the total
PIPE7 deals, 3% of the total; deal value of US$1.17 billion, 49% of the total
Q4 2015
There were a total of 154 deals in the Technology sector, with a total investment value of US$1.46 billion.
Late stage:54 deals, 35% of the total; deal value of US$560 million, 38% of the total
Expansion stage:48 deals, 31% of the total; deal value of US$185 million, 13% of the total
Early stage:37 deals, 24% of the total; deal value of US$119 million, 8% of the total
PIPE15 deals, 10% of the total; deal value of US$596 million, 41% of the total
Figure 33: Deal volume by stage of development in the Technology sector Q3’15
Figure 34: Deal value by stage of development in the Technology sector Q3’15 (US$m)
9836%
73%
8833%76
28%
PIPEEarly stageExpansion stage
Late stage
$29712%
$1,17049%
$54023%$385
16%
PIPEEarly stage
Expansion stageLate stage
Figure 35: Deal volume by stage of development in the Technology sector Q4’15
Figure 36: Deal value by stage of development in the Technology sector Q4’15 (US$m)
5435%
4831%37
24%
1510%
PIPEEarly stageExpansion stageLate stage
$59641%
$1198%
$18513% $560
38%
PIPEEarly stageExpansion stageLate stage
QoQ comparison between Q2 2015
and Q3 2015
Deal volume
Deal value
Early stage 159% 581%
Expansion stage技
113% 20%
Late stage 95% 242%
PIPE 17% 13%
26 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by region
In H2 2015, the top five regions with the highest deal volume in the Technology sector were, in descending order, Beijing, Shanghai, Shenzhen, Guangdong Province (excluding Shenzhen) and Jiangsu Province. Beijing took the top spot, with 121 deals. Shanghai had 53 deals. Shenzhen had 52 deals. Guangdong Province (excluding Shenzhen) had 44 deals. Jiangsu Province had 27 deals. While in terms of deal value, Tianjin ranked first, with deal value totalling US$1.19 billion. Beijing ranked second, with deal value totalling US$739 million. Shenzhen ranked third, with deal value totalling US$569 million. Fujian Province ranked fourth and exceeded Shanghai for the first time, with deal value totalling US$281 million, which was slightly higher than US$265 million of Shanghai.
Being included in the ranking list for the first time, Tianjin ranked first
Tianjin’s deal value ranked first in H2 2015, mainly due to two deals with value exceeding US$100 million each (one deal had a value of US$1 billion). This disproves the traditional thinking that Beijing must always rank first in terms of deal volume and deal value. In H2 2015, Shenzhen and Fujian Province each had a deal with value exceeding 100 million, putting Shanghai slightly behind in terms of deal value.
Figure 37: The top six regions for Technology investments Q3/Q4’15 (Deal volume/Deal value)
121
53 $265
$739
52 $569
44 $226
27
9
7
$182
$281
$1,191
0 1,000500 1,500Deal volume
Beijing
Shanghai
Shenzhen
Tianjin
Guangdong Province (except Shenzhen)
Jiangsu ProvinceFujian Province
US$m
27 MoneyTreeTM China TMT Report Q3/Q4 2015
The Internet Services subsector became the most active in the Internet sector in H2 2015, and the total deal volume and value reached a historical high level since 2012
In H2 2015, investments in the Internet Services subsector accounted for the majority of Internet sector investments, surpassing the E-commerce subsector which had been the leader. The deal volume and deal value in Q3 rose by 177% and 62%, respectively, compared to Q2, both reaching a new historical high since 2012. In Q4, both the deal volume and deal value decreased slightly, but were still greater than the investments in H1 2015. In H2, there were a total of 19 deals in the Internet sector with single values of over US$100 million each. Among them there were seven deals in the Internet Services subsector with total deal value of US$1.93 billion. In H2, the biggest single-deal value in the Internet sector was US$500 million, which was provided to a well-known online travel company.
The deal volume in the E-commerce subsector in Q3 reached record highs since 2012
In H2, the E-commerce subsector continued its strong trend from H1. The deal volume in Q3 hit a new record since 2012 and increased by 64% compared to Q2, while the deal value rose by 30% QoQ. In H2 2015, there were in total five deals with single values over US$100 million each, all of which were expansion-stage deals in B2C. The biggest single-deal value was US$200 million.
Investments in Internet
The Internet sector includes E-commerce, Online Education, Internet Services, Online Entertainment, Social Media, Internet Marketing and Internet Finance.
Deal value in Internet Marketing in Q3 was almost US$1 billion, a new historical high since 2012
The deal value in the Internet Marketing subsector in Q3 was almost US$1 billion, a sharp increase of 1337% compared to Q2, and a new historical high since 2012. The deal volume in Q3 doubled compared to Q2. In Q4, there was a slight decrease in the investments. In H2, there were in total of four deals in the Internet Marketing subsector with single values over US$100 million each, among which two deals were PIPE investments provided to companies providing information portals. In H2, the biggest single-deal value in the Internet Marketing subsector was US$467 million.
Figure 38: Deal value in the Internet sector – Q1 2013-Q4 2015
6,000
5,000
4,000
3,000
2,000
1,000
0
Q1’15
$913$408
$578 $854
$1,654$1,782
$2,267 $1,996
$4,819
$3,728
$5,361
$3,505
Q2’15 Q3’15 Q4’15Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14
E-commerceInternet Services
Internet Marketing Social Media
Online Education
Online EntertainmentInternet Finance
US$m
Figure 39: Deal volume in the Internet sector – Q1 2013-Q4 2015
250
200
150
100
50
0
Q1’15 Q2’15 Q3’15 Q4’15Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14
47 55 55 5554
107
61 61
21 21
48
10
39 3939
80 82 87
154
219
90 9479
132
1723 1417
2027 29
6 6 616
12
12
1616
1616
4 48 8 8 85 6 613
211 1216 1611 1123
3129 2924
1 34
11
12
12
18 18 19 19 194 4 9
107 7 737
E-commerce Internet Services
Internet MarketingSocial Media
Online Education Online Entertainment
Internet Finance
Investments in the Internet Finance subsector decreased slightly in H2
In H1 2015, the Internet Finance subsector saw its biggest growth since 2012. By contrast, in H2, due to stricter financial regulation, both the deal volume and deal value decreased QoQ. In addition, there were seven deals with single values over US$100 million each in H1, while in H2 the number of such deals was only two.
28 MoneyTreeTM China TMT Report Q3/Q4 2015
QoQ comparison between Q2 2015
and Q3 2015
Deal volume
Dealvalue
E-commerce 64% 30%
Online Education 10% 35%
Internet Services 177% 62%
Online Entertainment
9% 26%
Social Media 25% 28%
Internet Marketing 100% 1,337%
Internet Finance 技技 37% 17%
Deal volume and value
Q3 2015
There were 487 deals in the Internet sector, with a total investment value of US$5.36 billion.
Internet Services: 219 deals, 45% of the total; deal value of US$1.71 billion, 32% of the total
E-commerce:154 deals, 32% of the total; deal value of US$1.54 billion, 29% of the total
Internet Finance: 55 deals, 12% of the total; deal value of US$856 million, 16% of the total
Online Education:19 deals, 4% of the total; deal value of US$87 million, 2% of the total
Internet Marketing: 16 deals, 3% of the total; deal value of US$979 million, 18% of the total
Online Entertainment: 12 deals, 2% of the total; deal value of US$126 million, 2% of the total
Social Media:12 deals, 2% of the total; deal value of US$62 million, 1% of the total
Figure 40: Deal volume by Internet subsector Q3’15
21945%
194%
122%16
3%
122%
15432%
5512%
E-commerceInternet Services
Internet MarketingSocial Media
Online Education Internet FinanceOnline Entertainment
Figure 41: Deal value by Internet subsector Q3’15 (US$m)
$1,53729%
$1,71432%
$621%
$1262%
$872%
$97918%
$85616%
E-commerceInternet ServicesInternet Marketing
Social Media
Online Education Internet Finance
Online Entertainment
29 MoneyTreeTM China TMT Report Q3/Q4 2015
QoQ comparison between Q3 2015
and Q4 2015
Deal volume
Dealvalue
E-commerce 65% 57%
Online Education 16% 403%
Internet Services 51% 10%
Online Entertainment
42% 64%
Social Media 75% 89%
Internet Marketing 19% 68%
Internet Finance 技技 29% 40%
Deal volume and value
Q4 2015
There were 239 deals in the Internet sector, with a total investment value of US$3.51 billion.
Internet Services:107 deals, 45% of the total; deal value of US$1.54 billion, 44% of the total
E-commerce:54 deals, 23% of the total; deal value of US$655 million, 18% of the total
Internet Finance:39 deals, 16% of the total; deal value of US$514 million, 14% of the total
Online Education:16 deals, 7% of the total; deal value of US$435 million, 12% of the total
Internet Marketing:13 deals, 5% of the total; deal value of US$312 million, 9% of the total
Online Entertainment:7 deals, 3% of the total; deal value of US$45 million, 2% of the total
Social Media:3 deals, 1% of the total; deal value of US$7 million, 1% of the total
Figure 42: Deal volume by Internet subsector Q4’15
Figure 43: Deal value by Internet subsector Q4’15 (US$m)
10745%
167%
73%
135%
31%
5423%
3916%
E-commerceInternet Services
Internet MarketingSocial Media
Online Education Internet FinanceOnline Entertainment
$65518%
$1,53744%$7
1%
$452%
$3129%
$43512% $514
14%
E-commerceInternet Services
Internet MarketingSocial Media
Online Education Internet FinanceOnline Entertainment
30 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by stage of development
In H2, early-stage investments increased rapidly, with both the deal volume and deal value creating new historical highs since 2012
Early stage has been the hottest investment stage of the Internet sector since Q4 2012. In Q3 2015, both the deal volume and deal value for the early stage created a new historical high since 2012. In Q4, this figure decreased slightly, but was still at a high level. In H2, there were a total of seven deals with single values over US$100 million each, and the average deal value of these seven deals was US$190 million.
Figure 44: Deal value by stage of development in the Internet sector – Q1 2013-Q4 2015
6,000
5,000
4,000
3,000
2,000
1,000
0
PIPE
Q1’15
$913
$409$578
$854
$1,654 $1,782
$2,267$1,996
$4,819
$3,728
$5,361
$3,505
Q2’15 Q3’15 Q4’15Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14
Expansion stageLate stage Early stage
US$m
Figure 45: Deal volume by stage of development in the Internet sector – Q1 2013-Q4 2015
400
350
300
250
200
150
100
50
0Q1’15 Q2’15 Q3’15 Q4’15Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14
PIPE
0 0 01 1 1 12 2 25
55
49 7 44 8 12 22
1030 2042 45 37
5841
66 58
98
4643 5168
84 77
176 180
292
241
366
184
62646
Expansion stage Late stageEarly stage
The deal volume in the expansion and late stages in Q3 hit new highs since 2012
The development of expansion-stage and late-stage investments was relatively steady. Though the deal volume in Q3 rose substantially QoQ, creating a new high since 2012, the deal value did not hit new records. In H2, there were in total seven deals with values over US$100 million each in the expansion stage, among which five deals belonged to the E-commerce subsector. There were a total of two huge deals in H2 in the late stage, with values of US$396 million and US$359 million, respectively, both belonging to the Internet Services subsector.
There were multiple huge deals in H2 of the PIPE stage, and the deal value in Q4 reached a new historical high since 2012
There were only five deals in the PIPE stage in H2 2015, but among them there were three huge investments with values of US$500 million, US$467 million and US$204 million, respectively. Therefore, the deal value in Q4 accounted for more than that of the expansion stage and hit a new record since 2012.
31 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by stage of development
Q3 2015
There were 487 deals in the Internet sector, with a total investment value of US$5.36 billion.
Early stage:366 deals, 75% of the total; deal value of US$2.37 billion, 44% of the total
Expansion stage:98 deals, 20% of the total; deal value of US$1.59 billion, 30% of the total
Late stage:22 deals, 4% of the total; deal value of US$939 million, 17% of the total
PIPE:1 deal, 1% of the total; deal value of US$467 million, 9% of the total
Q4 2015
There were 239 deals in the Internet sector, with a total investment value of US$3.51 billion.
Early stage:184 deals, 77% of the total; deal value of US$1.95 billion, 55% of the total
Expansion stage:46 deals,19% of the total; deal value of US$762 million, 22% of the total
Late stage:5 deals, 2% of the total; deal value of US$24 million, 1% of the total
PIPE:4 deals, 2% of the total; deal value of US$772 million, 22% of the total
Figure 46: Deal volume by stage of development in the Internet sector Q3’15
Figure 47: Deal value by stage of development in the Internet sector Q3’15 (US$m))
Figure 48: Deal value by stage of development in the Internet sector Q4’15 (US$m)
Figure 49: Deal value by stage of development in the Internet sector Q4’15 (US$m)
36675%
9820%
11%22
4%
Expansion stageLate stageEarly stage
Undisclosed
$1,58930%
$93917%
$2,36744%
$4679%
Expansion stageLate stageEarly stage
Undisclosed
18477%
42%
4619%
52%
Expansion stageLate stageEarly stage
PIPE
$241%
$1,94855%
$76222%
$77222%
Expansion stageLate stage
Early stagePIPE
QoQ comparison between Q2 2015
and Q3 2015
Deal volume
Deal value
Early stage 52% 56%
Expansion stage
69% 6%
Late stage 83% 1,081%
PIPE 50% 26%
QoQ comparison between Q3 2015
and Q4 2015
Deal volume
Deal value
Early stage 50% 18%
Expansion stage
53% 52%
Late stage 77% 97%
PIPE 300% 65%
32 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by region
During Q3 and Q4 2015, the top three regions in terms of deal volume in the Internet sector were, in descending order, Beijing, with 261 deals and a total deal value of US$3.25 billion; Shanghai, with 148 deals and a total deal value of US$2.62 billion and Zhejiang, with 85 deals and a total deal value of US$636 million. From the perspective of investment value, Shenzhen and Jiangsu overtook Zhejiang with US$738 million and US$705 million, respectively, and entered the top 3 and top 4 spots, respectively.
Figure 50: The top six regions for Internet sector investments in Q3/Q4’15 (Deal volume/Deal value)
261 $3,246
85 $636
63 $738
50 $172
31 $705
148 $2,622
0 1,000500 2,000 2,5001,500 3,5003,000Deal volume
Beijing
Shanghai
Shenzhen
Guangdong Province (except Shenzhen)
JiangsuProvince
ZhejiangProvince
US$m
33 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments in Telecommunications and MobileThe Telecommunications and Mobile sector includes Telecom Equipment and Terminals, Other Telecommunications Subsectors and Mobile.
Deal volume and value
Q3 2015
There were 152 deals in Telecommunications and Mobile sector, with a total investment value of US$4.28 billion.
Mobile: 141 deals, 93% of the total; deal value of US$4.25 billion, 99% of the total
Telecom Equipment and Terminals:6 deals, 4% of the total; deal value of US$31 million, 0.7% of the total
Other Telecommunications Subsectors: 5 deals, 3% of the total; deal value of US$4 million, 0.3% of the total
Mobile: the largest single deal value was in Q3, which broke historical records in the whole TMT industry since 2012
In Q3 2015, investment value in Mobile reached historical highs since 2012, hitting US$4.25 billion and accounting for 99% of the total investments in the sector. This was up nearly 400% QoQ. In Q4 2015, investments decreased by 91% QoQ, mainly due to a single investment in a well-known taxi hailing app enterprise amounting to US$3 billion in Q3 2015. This deal value also reached a record high for single-deal value in the entire TMT industry since 2012. In Q3 and Q4, the number of deals of single value over US$100 million in the Telecommunications and Mobile sector were three and one, respectively. And all of these deals belonged to the Mobile subsector.
The deal volume and deal value in Other Telecommunications Subsectors in Q4 rose slightly
The deal volume of this subsector has never surpassed 10 deals and the deal value was also historically low. The deal volume and deal value in Q3 equalled that of Q2, while in Q4, the deal volume and deal value rose by 60% and 1,667% QoQ, respectively. The total deal value in this subsector increased due to two PIPE investments in Q4, which were each over US$10 million.
Telecom Equipment and Terminals: Investments were stable in H2
There were six deals and four deals in Q3 and Q4 in the Telecom Equipment and Terminals subsector with deal value of US$31 million and US$18 million, respectively. These levels were relatively equal with prior years.
Figure 51: Deal volume by subsegment in the Telecommunications and Mobile sector Q3’15
Figure 52: Deal value by subsegment in the Telecommunications and Mobile sector Q3’15 (US$m)
14193%
53%
64%
MobileTelecom Equipment and TerminalsOther Telecommunications Sectors
$4,24795%
$40.3%
$310.7%
MobileTelecom Equipment and TerminalsOther Telecommunications Sectors
34 MoneyTreeTM China TMT Report Q3/Q4 2015
Q4 2015
There were 61 deals in Telecommunications and Mobile sector, with a total investment value of US$480 million.
Mobile:49 deals, 80% of the total; deal value of US$393 million, 82% of the total
Other Telecommunications Subsectors:8 deals, 13% of the total; deal value of US$69 million, 14% of the total
Telecom Equipment and Terminals:4 deals, 7% of the total; deal value of US$18 million, 4% of the total
Figure 53: Deal volume by subsectors in the Telecommunications and Mobile sector Q4’15
Figure 54: Deal value by subsectors in the Telecommunications and Mobile sector Q4’15(US$m)
4980%
47%
813%
Mobile
Telecom Equipment and TerminalsOther Telecommunications Sectors
$39382%
$184%
$6914%
Mobile
Telecom Equipment and TerminalsOther Telecommunications Sectors
QoQ comparison between Q2 2015
and Q3 2015
Deal volume
Dealvalue
Mobile 45% 398%
Telecom Equipment and Terminals
100% 1,736%
Other Telecommunications Subsectors 传传
— 3%
QoQ comparison between Q3 2015
and Q4 2015
Deal volume
Dealvalue
Mobile 65% 91%
Telecom Equipment and Terminals
33% 42%
Other Telecommunications Subsectors 传传
60% 1,667%
35 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by stage of development
Q3 2015
There were 152 deals in Telecommunications and Mobile sector, with a total investment value of US$4.282 billion.
Early stage:125 deals, 82% of the total; deal value of US$1.07 billion, 25% of the total
Expansion stage:22 deals, 14% of the total; deal value of US$3.2 billion, 74.5% of the total
Late stage:4 deals, 3% of the total; deal value of US$19 million, 0.4% of the total
PIPE:1 deal, 1% of the total; deal value of US$2 million, 0.1% of the total
Q4 2015
There were 61 deals in Telecommunications and Mobile sector, with a total investment value of US$480 million.
Early stage:42 deals, 69% of the total; deal value of US$198 million, 41% of the total
Expansion stage:13 deals, 21% of the total; deal value of US$170 million, 36% of the total
PIPE:4 deals, 7% of the total; deal value of US$101 million, 21% of the total
Late stage:2 deals, 3% of the total; deal value of US$11 million, 2% of the total
Figure 55: Deal volume by stage of development in the Telecommunications and Mobile sector Q3’15
Figure 57: Deal volume by stage of development in the Telecommunications and Mobile sector Q4’15
Figure 56: Deal value by stage of development in the Telecommunications and Mobile sector Q3’15 (US$m)
Figure 58: Deal value by stage of development in the Telecommunications and Mobile sector Q4’15 (US$m)
12582%
2214%1
1%4
3%
PIPEEarly stage Expansion stageLate stage
$3,19574.5%
$1,06625%
$190.4%
$20.1%
PIPE Early stage Expansion stageLate stage
PIPE
4269%
23%
1321%
47%
Early stage Expansion stageLate stage
QoQ comparison between Q2 2015
and Q3 2015
Deal volume
Deal value
Early stage 49% 130%
Expansion stage
29% 717%
Late stage — 410%
PIPE N/A N/A
QoQ comparison between Q3 2015
and Q4 2015
Deal volume
Deal value
Early stage 66% 81%
Expansion stage
41% 95%
Late stage 50% 43%
PIPE 300% 5,833%
$19841%
$17036%
$112%
$10121%
PIPEEarly stage Expansion stage
Late stage
36 MoneyTreeTM China TMT Report Q3/Q4 2015
Investments by region
During Q3 and Q4 2015 in the Telecommunications and Mobile sector, Beijing took the top spot with 76 deals and total deal value of US$3.42 billion. Shanghai took second place with 43 deals. There were 22 deals in Shenzhen, 20 deals in Guangdong (excluding Shenzhen) and 20 deals in Zhejiang, respectively. From the perspective of deal value, the top three remained the same in terms of deal volume. Sichuan ranked fourth with a total deal value of US$165 million and Guangdong (excluding Shenzhen) came fifth with a total deal value of US$120 million. The largest single deal was US$600 million provided to a well-known taxi hailing app enterprise in Beijing.
Figure 59: The top six regions for investment in the Telecommunications and Mobile sector Q3/Q4’15 (Deal volume/Deal value)
76 $3,420
20
20
$19622
$120
12 $165
$57
43 $720
0 4,0003,0002,0001,000
Beijing
Shanghai
Shenzhen
ZhejiangProvince
SichuanProvince
Guangdong Province (except Shenzhen)
Deal volume
US$m
37 MoneyTreeTM China TMT Report Q3/Q4 2015
The Mobile subsector mainly includes Mobile Entertainment, Mobile Advertising, Mobile Shopping, Mobile Healthcare, Mobile Technology, Mobile Education, Mobile Services, Mobile Social Media and Mobile Messaging.
5. A close look at investments in Mobile
MobileShopping
Mobile
MobileEntertainment Mobile
Technology
Mobile Services(Including Mobile TravelServices, Mobile Housekeeeping Services)
Mobile Messaging
Education
Mobile Social Media
Mobile Advertising
Mobile Healthcare
(Including Mobile Video, Mobile Music, Mobile Gaming, etc.)
38 MoneyTreeTM China TMT Report Q3/Q4 2015
Deal volume and value
Q3 2015
In Q3 2015, the total number of deals in the Mobile subsector was 141, with a total investment value of US$4.25 billion.
Mobile Services: 53 deals, 38% of the total; deal value of US$3.34 billion, 79% of the total
Mobile Social Media: 32 deals, 23% of the total; deal value of US$142 million, 3% of the total
Mobile Entertainment:23 deals, 16% of the total; deal value of US$554 million, 13% of the total
Mobile Technology: 14 deals, 9% of the total; deal value of US$31 million, 1% of the total
Mobile Shopping: 10 deals, 7% of the total; deal value of US$104 million, 2% of the total
Mobile Healthcare: 6 deals, 4% of the total; deal value of US$53 million, 1.5% of the total
Mobile Messaging: 2 deals, 2% of the total; deal value of US$14 million, 0.3% of the total
Mobile Advertising: 1 deal, 1% of the total; deal value of US$10 million, 0.2% of the total
Mobile Education: No deals in Q3 2015
Deal volume and value
Q4 2015
In Q4 2015, the total number of deals in the Mobile subsector was 49, with a total investment value of US$393 million.
Mobile Services:18 deals, 37% of the total; deal value of US$93 million, 24% of the total
Mobile Entertainment:10 deals, 21% of the total; deal value of US$107 million, 27% of the total
Mobile Social Media:9 deals, 18% of the total; deal value of US$49 million, 12% of the total
Mobile Technology:6 deals, 12% of the total; deal value of US$36 million, 9% of the total
Mobile Healthcare:2 deals, 4% of the total; deal value of US$3 million, 1% of the total
Mobile Education:2 deals, 4% of the total; deal value of US$2 million, 1% of the total
Mobile Messaging:1 deal, 2% of the total; deal value of US$100 million, 25% of the total
Mobile Advertising:1 deal, 2% of the total; deal value of US$2 million, 1% of the total
Mobile Shopping:No deals in Q4 2015
Figure 60: Deal value by Mobile Internet subsegments – Q1 2013-Q4 2015
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Q1’15
$68 $78 $215 $175$448 $482
$859 $853
$393
$1,386$1,239
$4,247
Q2’15 Q3’15 Q4’15Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14
US$m
Mobile Entertainment Mobile Advertising Mobile Shopping
Mobile Healthcare Mobile TechnologyMobile Education
Mobile Services Mobile Social MediaMobile Messaging
39 MoneyTreeTM China TMT Report Q3/Q4 2015
In H2, Mobile Services, Mobile Entertainment and Mobile Social Media were the three pillars of the Mobile subsector.
Mobile Services: Ranking first, with boom arising from huge investments in taxi-hailing APPs
Taxi-hailing apps have been the major investment area in the Mobile Services subsector since 2014. In Q3 2015, a single deal valued at US$3 billion for a taxi-hailing app company was the biggest single-deal value in the TMT industry since 2012. In addition, in Q3, the deal volume in the Mobile Services was over 50 deals for the first time, reaching a new record high since 2012. In Q4, both the deal volume and deal value decreased substantially due to lack of large investments.
Mobile Entertainment: Deal value ranking second and deal volume ranking third, with a substantial increase in single-deal value
Mobile Entertainment has been ranking third since 2014 within the Mobile subsector, and it remains in that position. In H2 2015, although the deal volume in Mobile Entertainment decreased slightly compared to H1, the deal value increased substantially. Due to a huge investment of US$499 million provided to a well-known gaming company, the deal value in Q3 was over US$500 million, reaching a new historical high since 2012.
Driven by the “Internet +” strategy and led by the currently hottest subsector, Mobile Internet, traditional enterprises are entering a new stage, where various platforms such as services, entertainment and social media are emerging one after another. The operation model represented by O2O is an innovation highlight driven by Mobile Internet. In 2015, enterprises in some areas of the Mobile subsector stepped into a relatively steady development stage. An expansion-stage deal of US$3 billion in H2 was the best example of this. Whether the capital market faces turbulence or downturn in the future, we believe that we will still see strong investments in the Mobile subsector.
PwC Viewpoints
Figure 61: Deal volume by Mobile subsegments – Q1 2013-Q4 2015
60
50
40
30
20
10
0
Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15
9
22 1 1 1 1 1 11 1 11 1 114
1011 12
11
68 8 8 8 8 87 7776 6 6 6 6 6 6 6 65 5 5 5
1512
14 1416
2018 1819 1919
15
24
20 2023 23
29 29 29
44
53
3229
31
2 2 2 236
3 3 3 33 4 4 443
9 9 9 9
2 2 2
10 10 10
Mobile Entertainment Mobile Advertising Mobile Shopping
Mobile Healthcare Mobile TechnologyMobile Education
Mobile Services Mobile Social MediaMobile Messaging
Mobile Social Media: Deal volume ranking second and deal value ranking third, with the deal value in Q3 refreshing historical records since 2012
In H2 2015, the deal volume in Mobile Social Media decreased slightly compared to H1, not surpassing the strong volume seen in Q1. However, the deal value in Q3 was over US$100 million, a rise of 406% compared to Q2, creating a new historical high since 2012.
Mobile Messaging: Seeing the first large deal since 2012
Among the various ranking of Mobile subsector, Mobile Messaging always ranked behind others, and the deal volume was generally below five deals. In H2 2015, there were a total of three deals. But in Q4, a messaging company in Shenzhen obtained an investment of US$100 million, which broke the traditional view.
40 MoneyTreeTM China TMT Report Q3/Q4 2015
6. Methodology and definitions
TMT is an acronym for Telecommunications, Media and Technology. The three words represent Telecommunications and mobile, Media and Technology, respectively. In this report, we have carried out analysis of the three most active sectors within TMT. They are Technology, Internet and Telecommunications and Mobile.
This report covers Q3 and Q4 2015. However, in order to show trends and make comparisons in the industry, we have included data from the year 2013 to the first half of 2015. In this report, only deals disclosing specific investment data were included in relevant analysis. Deals that did not disclose the specific investment period, deal value or investment stage were excluded from the relevant analysis in order to maintain the accuracy of the report.
All data in this report was provided by Zero2IPO Research.
DefinitionsTechnology sector
Hardware: Computer hardware, computer peripherals, network equipment, etc.
Software: Basic software, software applications, etc.
IT Services: IT consultation, software outsourcing, hosting services, computer and network security, etc.
Electronics & Optoelectronics Devices: Optoelectronic components, optoelectronics, electronics, power supply, etc.
Semiconductor: IC design, IC testing and packaging, IC equipment manufacturing, etc.
Internet sector
E-commerce: B2C, B2B, C2C, etc.
Internet Marketing: Information portal, search engine, advertising agency and Internet marketing services
Internet Services: Online travel services, online recruitment services, online housekeeping services, etc.
Online Education: E-learning, online classroom, etc.
Online Entertainment: Online gaming, online video and online music
Social Media: BBS/Forum, online networking, etc.
Internet Finance: I-finance, E-payment, etc.
Telecommunications and Mobile sector
Telecom Equipment and Terminals: Telecommunications and mobile equipment, Telecommunications and mobile terminals, Telecommunications and mobile software, etc.
Other Telecommunications Subsectors: Mobile operators, Fixed-line operators, Virtual network operator (VNO) and others.
Mobile: Mobile entertainment, Mobile advertising, Mobile shopping, Mobile healthcare, Mobile technology, Mobile education, Mobile services, Mobile social media, and Mobile messaging
Entertainment and Media sector
Traditional Media: Newspaper, magazines, publishing, etc.
Outdoor Media: Outdoor print ads, outdoor LED TV, mobile TV, building TV, etc.
Video Production and Distribution: Film and television production and distribution, film projection, etc.
Advertising Creation/Agency: Ad creation, media buying, ad agency, etc.
Cultural Transmission: Culture brokerage and agency, etc.
Entertainment & Leisure: Animation and other industries
41 MoneyTreeTM China TMT Report Q3/Q4 2015
Stage of development
Early stage: This stage varies from one to five years while the product or concept is under development and not yet in mass and commercial production. During this stage, funds are mainly used for acquiring production equipment and developing products as well as marketing and setting up management systems.
Expansion stage: The investment period at this stage usually lasts about two or three years. The products or services have been recognised by the market. The company generally needs more funds to further develop the product, as well as to expand facilities and production. Inventory planning and marketing efforts are also ramped up.
Late stage: During this stage, the company has grown its operating revenue, and is more likely to be, but not necessarily, profitable. The company may have plans to go public. The main purpose of financing is to seek capital to grow capacity, and to introduce shareholders with industry experience and influence, thereby increasing corporate recognition and attracting shareholders. The company will aim to improve its financial structure and management system in preparation for listing. At this stage, the investment risk is the lowest, but the chance of high returns is also lower.
PIPE (private investment in public equity): PE investments in publicly listed companies via preferential allotments or private placements, and the acquisition of shares by PE firms via the secondary market.
Exits
IPO: IPO is short for Initial public offering. IPO refers to listing on the stock markets in Shanghai, Shenzhen, Hong Kong, and overseas, including the NEEQ.
Strategic sale: This includes the sale of the PE or VC investors’ equity stakes (or the entire investee company itself) to a third-party company.
Management buy-out: The purchase of a company by its management through either debt-credit finance or stock transaction, which results in relevant changes in corporate ownership, control, residual claim and assets, in order to alter the structure of corporate proprietary rights. Through management buy-out, the company’s operators become its owners.
Secondary sale: Any purchase of the PE or VC investors’ equity stakes by another PE or VC investors constitutes secondary sale.
42 MoneyTreeTM China TMT Report Q3/Q4 2015
If you’d like to discuss what’s happening in your particular TMT market or how PwC might be able to help your company meets its challenges, please reach out to one of the TMT industry leaders listed here.
7. Contacts
Shenzhen Wilson Chow
PwC China/Hong Kong TMT Leader+86 (755) 8261 8886 [email protected]
Beijing
Qin Zhang+86 (10) 6533 2098 [email protected]
Shanghai
Jianbin GaoPwC China TMT Leader+86 (21) 2323 3362 [email protected]
Roland Xu+86 (21) 2323 2588 [email protected]
Frank Lin+86 (21) 2323 [email protected]
MoneyTreeTM China TMT Report Editorial Team
Frank LinPartner, TMT [email protected]
Stacy ZhangMarketing Manager, Private Equity & [email protected]
Catherine GuSenior Associate, [email protected]
GlobalRaman Chitkara+1 408 817 [email protected]
AustraliaRod Dring+61 2 8266 [email protected]
BrazilEstela Vieira+55 1 3674 [email protected]
CanadaChristopher Dulny+1 416 869 [email protected]
ChinaJianbin Gao+86 (21) 2323 [email protected]
FrancePierre Marty+33 1 5657 [email protected]
GermanyWerner Ballhaus+49 211 981 [email protected]
IndiaSandeep Ladda+91 22 6689 [email protected]
JapanMasahiro Ozaki+81 3 5326 9090 [email protected]
KoreaHoonsoo Yoon+82 2 709 [email protected]
NetherlandsIlja Linnemeijer+31 (0) 88 792 49 [email protected]
RussiaYury Pukha+7 495 223 [email protected]
SingaporeMark Jansen+65 6236 [email protected]
TaiwanAndy Chang+886 (2) 2729 6666 ext [email protected]
UAEPhilip Shepherd+97 1 4304 [email protected]
UKJass Sarai+44 (0) 1895 52 [email protected]
USPierre-Alain Sur+1 646 471 [email protected]
43 MoneyTreeTM China TMT Report Q3/Q4 2015
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